Can a Baya Bar developer divert business from other franchisees to a competitor during the term of the agreement?
Baya_Bar Franchise · 2024 FDDAnswer from 2024 FDD Document
- 8.3 Noncompetition Covenants.
Developer acknowledges that, pursuant to this Agreement, Developer will receive valuable training, trade secrets and Confidential Information of the System that are beyond the present knowledge, training and experience of Developer.
Developer acknowledges that such specialized training, trade secrets and Confidential Information provide a competitive advantage and will be valuable to him or her in the development and operation of Baya Bar outlets, and that gaining access to such specialized training, trade secrets and Confidential Information is, therefore, a primary reason why Developer is entering into this Agreement.
In consideration for such specialized training, trade secrets, Confidential Information and rights, Developer covenants that, except as otherwise approved in writing by Franchisor:
- 8.3.1 During the term of this Agreement, Developer shall not, either directly or indirectly, for himself or herself or through, on behalf of, or in conjunction with, any person or entity (i) divert, or attempt to divert, any business or customer of the Developer's Baya Bar outlets or of other developers or franchisees in the System to any competitor, by direct or indirect inducement or otherwise; (ii) participate as an owner, partner, director, officer, employee, consultant or agent or serve in any other capacity in any retail or café business featuring acai or similarly prepared smoothies or bowls; or (iii) do or perform, directly or indirectly, any other act injurious or prejudicial to the goodwill associated with the Marks and the System or (iv) in any manner interfere with, disturb, disrupt, decrease or otherwise jeopardize the business of the Franchisor or any Baya Bar developers or franchisees or Franchisor-affiliated outlets.
Source: Item 23 — RECEIPTS (FDD pages 56–189)
What This Means (2024 FDD)
According to Baya Bar's 2024 Franchise Disclosure Document, during the term of the agreement, a developer is prohibited from diverting business away from their own Baya Bar outlets or other franchisees within the Baya Bar system to a competitor. This restriction is part of the noncompetition covenants outlined in the agreement. The developer also cannot participate in any retail or café business featuring acai or similarly prepared smoothies or bowls.
This covenant aims to protect Baya Bar's competitive advantage, goodwill, and the overall business of the franchisor and its franchisees. The agreement states that the developer receives valuable training, trade secrets, and confidential information, which provides a competitive edge in operating Baya Bar outlets. Therefore, gaining access to this specialized knowledge is a primary reason for entering the agreement, justifying the non-compete obligations.
After the agreement expires or terminates, or upon a transfer, the developer is restricted for 24 months from diverting business or participating in a similar business within five miles of the Development Area or any Baya Bar location. Baya Bar can seek injunctive relief, preventing the developer from violating these non-compete terms, and claims against Baya Bar do not constitute a defense against enforcing these covenants. These restrictions are acknowledged by the developer as fair and reasonable, considering their other skills and opportunities for income.